The official blog of Illinois Issues magazine,
published by the Center for State Policy and Leadership
at the University of Illinois Springfield

Thursday, December 08, 2011

House reaches deal on tax breaks

By Jamey Dunn

Members of the Illinois House working on a plan geared toward keeping businesses in the state say they have reached a deal.

Lawmakers returned to the Statehouse last week in hopes of passing tax breaks for Sears and the CME Group, which owns the Chicago Mercantile Exchange and the Chicago Board of Trade. Legislation passed in the Senate but only received 8 “yes” votes in the House. John Bradley, sponsor of a separate House plan, announced that he would not call his bill in that chamber because he lacked to support to get it through. Senate President John Cullerton said that Bradley’s measure could not pass in the Senate.

The House and Senate plans differed in the size of tax breaks individuals would receive. The House plan would have increased the Earned Income Tax Credit from 5 percent of the federal credit to 7.5 percent, but the Senate version would have increased the credit to 10 percent over two years. The General Assembly left without approving a plan, and House Democrats and Republicans have been working to reach a deal since.

Supporters hope to have better luck when legislators return next week. “After days of carefully weighing the costs and benefits of possible proposals, [House Minority Leader Tom] Cross and I crafted a bipartisan package of tax relief that will keep jobs in Illinois, spur further investment in new products by our manufacturers and provide tax relief for families and small businesses,” Bradley, a Marion Democrat, said in a written statement.

The “deal” is very similar to the plan that passed in the Senate, but this time the plan is split into two bills. Some Republicans in the House did not support the tax cuts for individuals in the plan, and some House Democrats were unwilling to settle for the smaller individual tax breaks contained in the House proposal. Splitting the two will allow lawmakers to vote for the aspects they support without having to vote for the other portion. Cross has pledged Republican support for the business tax incentives, something he did not do for the first version of the plan. “We have come to an agreement on a jobs package that will give some relief to a broad base of businesses in our state. This package will allow businesses to plan on longer term research and development and the ability to carry their losses forward in a tough economy. It will also lessen the tax burden on our family farmers and small businesses,” he said in a prepared statement.

Champion Labs in Albion has been added to the deal. The southern Illinois manufacturer would receive a credit that would cost the state $3.5 million over 10 years. The plan also includes other tax cuts that sponsors say will help businesses across the state, such as an extension of a tax break for research and development.

After one package went down in flames last week, reactions to the current deal were guarded. “We are encouraged that they are returning to Springfield to consider a package that will help us remain an Illinois company,” Sears spokesman Chris Brathwaite said in a written statement. “We sincerely appreciate the efforts of many members of the General Assembly over the last several months on our behalf.”

It seems unlikely that Quinn would sign the business tax breaks bill unless the measure including the individual tax cuts also makes in to his desk.“The governor is very encouraged with the bipartisan agreement reached in the House. Before veto session, we brought the leaders to the table with the goal of delivering economic growth and tax reform that would provide relief to working families and help employers put more people to work,” Brooke Anderson, a spokesperson for Quinn, said in a written statement. “As we head into Monday's session, we'll continue working closely with the leaders and sponsors to get the job done. A spokesperson for Cullerton said the president’s staff is still reviewing the new bills.

The House is scheduled to return to Springfield on Monday, and the Senate plans to be back in session on Tuesday.

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The bureau follows state government from the Capitol Press Room and writes articles for Illinois Issues magazine, published by the Center for State Policy and Leadership at the University of Illinois at Springfield.
Contact: illinois.issues@gmail.com